Real Estate Credit Inves... Share Discussion Threads

[davebowler] 13/6/2022 09:52

Liberum;
Repayments drive LTV reduction

Mkt Cap £342m | Share price 149.0p | Prem/(disc) -2.1% | Div yield 8.1%

Event

Real Estate Credit Investments' NAV per share rose by 1.0% in May 2022 to 152.2p. The NAV uplift included the benefit of a 1.0p increase from the sale of the Vanderbilt housebuilder loan. There was a small negative impact of 0.2p from mark-to-market movement on the bond portfolio.

The Vanderbilt loan sale generated proceeds of £16.4m for RECI. The company has realised more than the investment made into the position. In addition, RECI received £17m from the repayment of a stretch senior core loan, resulting in an 8.5% IRR. A mezzanine loan secured on a value add/transitional asset in Paris has also repaid £11.6m over the last three months, generating 13.7% IRR and a 1.4x multiple.

Part of the proceeds have been reinvested with £22.8m deployed in the month:

Senior core+ hotel loan - £16.5m loan with an entry LTV of 67% and an expected exit date of April 2027. The expected IRR on the investment is 7.0%.
Residential development loan - £6.3m senior development loan to support the development of a residential scheme in London. The entry LTV is 55% and the expected return is 8.4%.
The manager reports a growing pipeline of potential investments to deploy the capital. RECI had £66.4m of cash at the month-end, resulting in gross and net LTV ratios of 31.4% and 12.3%, respectively.

Liberum view

We note the steady decline in the LTV ratio in recent months, aided by the mezzanine loan repayments in May. The exit of the housebuilder loan is important and will enable the company to recycle capital into the pipeline of senior loan investments. The manager took a prudent approach to loan valuations at the beginning of the crisis and this was reflected in the Vanderbilt loan which was written down to 42% of par in March 2020. The business has performed strongly since 2020, enabling a 1.0p per share value recovery in March 2021 in addition to the 1.0p NAV uplift in May 2022. The shares remain attractively valued at a 2.1% discount (8.1% prospective dividend yield).

[ga_dti] 09/6/2022 13:53

Hardman & Co interview discussing their latest report 'New faces, same resilience’ -

[davebowler] 07/6/2022 09:58

Liberum;
Small NAV uplift from exit of housebuilder loan

Mkt Cap £342m | Share price 149.0p | Prem/(disc) -1.7% (pro-forma) | Div yield 8.1%

Event

Real Estate Credit Investments has exited its investment in Elivia Homes, a UK housebuilder. RECI first invested in Elivia, formerly known as Vanderbilt Homes, in 2014. RECI will receive £16.4m of proceeds from the sale, adding c.1.0p per share or 0.7% to NAV.

Liberum view

We believe the position in Elivia Homes is the mezzanine loan to that was previously written down in March 2020. The manager took a prudent approach to loan valuations at the beginning of the crisis and this was reflected in the SME housebuilder loan which was written down to 42% of par in March 2020 (5.5p NAV impact). The business has performed strongly since 2020, enabling a 1.0p per share value recovery in March 2021 in addition to the 1.0p NAV uplift announced today. The £16.4m of proceeds to be received by RECI is equivalent to 76% of the value of the position at 29 February 2020.

[cerrito] 24/5/2022 15:09

Given all the dramas we have had in the last 2/3 months I have not focused very much on my exposure to RECI.
I have just gone through the fact sheets of the last 4 months.
Two things stand out.
The increase in the exposure in France-39% at 31.12.21 and 37% at 30.4.22, having climbed from the high teens in H2 2019.
Following the purchase of a £26m UK healthcare centre bond in January 2022 the increase in holdings of market bonds.

I intend to go back to sleep here but would be good if they were to go back to what they did 8/10 years ago and have investor calls/webinars.

[holts] 13/5/2022 08:47

You are not supposed to say that !

[williamcooper104] 12/5/2022 13:00

This has held up better than I would have thought given wider market tantrums

[davebowler] 12/5/2022 10:25

Liberum;
Consistent repayment activity

Mkt Cap £345m | Share price 150.5p | Prem/(disc) -0.1% | Div yield 8.0%

Event

Real Estate Credit Investments' NAV per share at 30 April 2022 was 150.6p, representing a 0.5% NAV total return in the month. RECI has generated a 7.0% NAV total return over the last 12 months. NAV performance in March was mainly due to interest income generation (+1.0p) with a small negative impact (-0.3p) from mark-to-market movements across the bond portfolio.

New commitments in March included a £10.6m senior loan to fund the development of an assisted living facility in London (55% entry LTV and an expected IRR of 8.8%). Loan repayments included £22.7m related to a core mezzanine loan in the UK (10.2% realised IRR) and £3.8m from a senior development loan in Dortmund (8.1% exit IRR).

At 30 April, RECI had £65.5m of cash and the manager expects to deploy the capital in near-term commitments. The gross and net leverage ratios were 30.5% and 11.5% (including asset-level debt).

Liberum view

The manager's recent quarterly update highlighted the strong operating performance of the portfolio with no positions of concern. Notable updates in the quarter included a strong trading update from the tenant in RECI's largest hotel loan exposure. Operating performance has surpassed expectations and the value of the collateral has been revalued upwards. The opportunity set for new investments is very strong with attractive risk-adjusted returns on offer. The manager's pipeline of new investments comprised potential deals in the UK, France and Spain. The short duration portfolio is well-positioned to mitigate the potential impact of interest rate increases.

Real Estate

[skyship] 08/4/2022 07:19

The highlights of the monthly update are provided below:


-- NAV as at 31 March 2022 was GBP1.499 per share, representing
a decrease of 2.2p per share from the 28 February 2022 NAV of
GBP1.521 per share.
-- The change in NAV per share was due to:-
Ø the payment of the fourth interim dividend of 3.0p, which
went ex-dividend in March,
Ø 1.0p of interest income; and
Ø 0.2p of negative mark-to-market ('MTM') adjustments across
the bond portfolio, due to yield-widening across the corporate
bond market, largely driven by the war in Ukraine and related
considerations.
-- Since 1 April 2021, the total NAV return for RECI was 7.2%.
-- During the month of March 2022, RECI committed GBP20.0m to a
senior development loan to support the development of an assisted
living facility in London. This deal has an expected IRR of
8.5%, with an entry LTV of 60% and an expected exit date of
December 2024.
-- Since 1 April 2021, RECI has:-
Ø committed GBP171.8m to 12 deals across 6 countries; and
Ø fully realised a total of GBP94.8m across 6 deals.
-- RECI paid out 4 dividends since 1 April 2021, totalling 12p.
-- The pipeline for the Cheyne real estate debt business continues
to grow in 2022, with many new attractive opportunities.

[badtime] 10/3/2022 11:46

Sp looking perky

[badtime] 07/3/2022 15:20

Nice recovery

[ammons] 04/3/2022 16:51

MNG is now 10%............. what to do...........

[ammons] 04/3/2022 16:44

With that RECI yield, I am happy to carry on getting it as I want to supplement my pension. So many others are looking tempting as well. LGEN, HDIV, BIPS..........

[hpcg] 04/3/2022 12:52

Sold out here. Should have done before it went ex-dividend really. I'm learning my lesson, I hope, that even secure short duration income plays can drop in price even if they keep paying their dividend and don't suffer any losses.

[cwa1] 17/2/2022 17:09

7 February 2022

Real Estate Credit Investments Limited (the "Company")

Ordinary Dividend for RECI LN (Ordinary shares)

Real Estate Credit Investments Limited announces today that it has declared a third interim dividend of 3.0 pence per Ordinary Share (a total amount of GBP 6,879,974.34) for the year ending 31 March 2022. The dividend is to be paid on 25 March 2022 to Ordinary Shareholders on the register at the close of business on 4 March 2022. The ex-dividend date is 3 March 2022.

[cwa1] 15/2/2022 15:46

Hardman Research:-



Snippet:-

Valuation: RECI trades at a 3% premium to a conservative NAV, in line with pre-pandemic average levels. With a 2022E 12p dividend, the 7.8% dividend yield is the highest of its immediate peers and covered by income. RECI’s defensive qualities mean that the dividend has been held throughout the COVID-19 crisis.


Risks: Any lender is exposed to the credit cycle and individual loans going wrong. Security is currently hard to value and to crystallise. We believe RECI has appropriate policies to reduce the probability of default, and loss in the event of default. Some assets are illiquid, and repo financing has a short duration.


Investment summary: RECI generates an above-average dividend yield from well-managed credit assets. Bond pricing includes a slight discount, reflecting uncertainty, which should unwind when conditions normalise. Market-wide credit risk is currently above-average, but RECI’s strong liquidity and debt restructuring expertise should allow it time to manage problem accounts. Borrowers, to date, have injected further equity into deals.

[catch007] 15/2/2022 10:29

Added a few this morning on the market dip

[skyship] 09/2/2022 09:20

MONTHLY UPDATE:

• NAV as at 31 January 2022 was £1.519 per share, representing an
increase of 0.4p per share from the 31 December 2021 NAV of £1.515
per share.

• The increase in NAV per share was primarily due to:-
# 1.0p of interest income; and
# 0.5p of negative mark-to-market (‘MTM’) adjustments across
the bond portfolio

• During the month of January, RECI invested £26.3m in a market bond
of a healthcare centre based in the UK.

• The Company had cash at the month end of £40.5m and gross
leverage of £101.5m (representing 29.2% of NAV and 1.18x
net/effective look through leverage).

• The pipeline for the Cheyne real estate debt business continues to
grow in 2022, with many new attractive opportunities.

[davebowler] 09/2/2022 09:04

Liberum;
Strong pipeline of potential transactions

Mkt Cap £362m | Share price 158.0p | Prem/(disc) 4.0% | Div yield 7.6%

Event

Real Estate Credit Investments' NAV per share at 31 January 2022 was 151.9p, representing a 0.2% NAV total return in the month. RECI has generated a 9.0% NAV total return over the last 12 months. NAV performance in January was impacted by 0.5p of negative mark-to-market movements on the bond portfolio.

The £397m portfolio is diversified across 65 positions (weighted average LTV of 62.6%). £26.3m was invested in January in a bond secured on UK healthcare centres. The company's cash balance at the month end was £40.5m (from £67m in December). The gross and net leverage ratios were 30.1% and 18.4% at 31 January 2022. The manager has reported a strong pipeline of potential transactions.

Liberum view

RECI remains well-placed to maintain its attractive return profile, given the focus on bilateral senior loans with strong downside protection. The opportunity set for new investments is very strong with attractive risk-adjusted returns on offer. Non-bank lenders continue to take market share as capital constraints limit the appetite of traditional lenders for certain types of lending. In the recent investor update, the manager indicated the pipeline across its wider real estate business (including RECI) is £1.3bn across 13 deals We expect continued strong NAV performance in 2022 as we expect NAV upside in addition to robust income generation. The company previously disclosed it was reviewing exit opportunities for one of its UK housebuilder loans and we believe this could result in a reversal of some of the valuation reduction taken in March 2020 (we estimate the loan is currently held at c.50% of par). The March 2020 writedown reduced NAV by 5.5p, of which 1.0p has been written back to date.

[williamcooper104] 01/2/2022 13:39

Senior loans/bonds = 80 percent of NAVHigh yielding whole loans are so much better than junior loans when things blow up

[my retirement fund] 01/2/2022 13:19

Stonking, we just need a sensible revision upwards in NAV now

[catch007] 01/2/2022 10:52

Lots to like about this investment summary:


Real Estate Credit Investments Limited



Investment Manager's Q3 Investor Presentation



Real Estate Credit Investments Limited ("RECI" or "the Company") is pleased to announce that the Investment Manager's Q3 Investor Presentation is now available on the Company's website at:



[...]



An extract from the Summary section of the presentation is set out for investors in the Appendix to this announcement.



For further information, please contact:



Broker: Richard Crawley / Darren Vickers (Liberum Capital) [phone]

Investment Manager: Richard Lang (Cheyne) [phone]





Appendix: Q3 Investor Presentation Extract



ü Attractive returns from low LTV credit exposure to UK and European commercial real estate assets

• Weighted Average LTV of 62.6% as at 31 December 2021

• Predominantly large, well capitalised, and experienced institutional borrowers



ü Quarterly dividends delivered consistently since October 2013

• The Company has consistently sought to pay a stable quarterly dividend

• This has led to a stable annualised dividend of around 7% of NAV



ü Highly granular book

• 64 positions



ü Transparent and conservative leverage

• Net effective leverage 10.7% (with £66.9m cash) as at 31 December 2021



ü Access to established real estate investment team at Cheyne, which manages over $4bn AUM



ü Access to pipeline of enhanced return investment opportunities identified by Cheyne



ü Robust mitigation against a rising rates environment

• A high yielding portfolio, combined with a short weighted average life of under 2 years, ensures minimal exposure to yield widening and the ability to redeploy quickly at higher rates



Key Quarter Updates



• Portfolio

- No defaults in the portfolio

- Migration of portfolio to senior lending in keeping with the compelling opportunity set therein

- 11 new deals completed (£152m of commitments) since 31 March 2021, showing strength of opportunity post the initial impact of Covid



• Cash

- Cash reserves remain robust



• Term matched financing

- Successful conclusion of term matched financing on a senior loan deal



• Opportunities

- Bank lending remains constrained across Europe and high barriers to entry secures a continued compelling investment landscape, especially in senior lending.

- The Company expects to deploy its currently available cash resources to its near term commitments and the new deals in the Cheyne pipeline

- Cheyne's pipeline includes a mix of UK, French and Spanish opportunities, which all offer attractive yields



Summary: Structural Strength - Positioned to Capitalise on Opportunities



• Having successfully navigated through the challenges posed by the COVID-19 pandemic, RECI is well positioned to address future market uncertainty, with a strong portfolio profile and modest leverage comprising,

- Senior loans and bonds equal to 80% of NAV

- Weighted average LTV of 62.6%

- The portfolio is concentrated on credits to large, well capitalised and experienced institutional borrowers

- Leverage of 1.30x gross (1.11x net of cash held) as at 31 December 2021

- Started to introduce term financing on senior loan investments

- Cash on balance sheet of £66.9m



• The Company has good visibility on its liquidity and income profile for the next financial year ending March 2022, and beyond



• The Company is positioned to take advantage of a new pipeline of opportunities from a position of strength:

- Cheyne's real estate business' current pipeline comprises £1.3 billion across 13 deals

[my retirement fund] 21/1/2022 16:56

Yes thats only because they have it as a buy from last year. This is not tip specific to reci

[panshanger1] 21/1/2022 16:27

Correct Questor says ( - with the proceeds ) buy RECI and BPCR

[my retirement fund] 21/1/2022 15:47

What about their bond maturing?

[panshanger1] 21/1/2022 15:29

Page 6 Business section !!